The 28-nation EU now insists its citizens be allowed to live and work freely in non-member Switzerland in exchange for enhanced Swiss access to the bloc's single market.
Anti-immigration members of the Swiss People's Party (SVP), the largest party in parliament, have pushed to end that free movement on the grounds that it leaves the country without adequate tools to manage its growing population and encroaches on its sovereignty.
A referendum must be held on the matter as the required number of signatures has been gathered, but it remains unclear how much support such a proposal might garner in a nationwide vote. No date for the vote has been set.
The seven-member cabinet, in an opening salvo urging voters to reject curbing immigration from the EU in the referendum, said approving it would hurt Swiss efforts to attract qualified workers, stunt economic growth by crimping exports and raise the prices consumers pay for EU imports.
"Cancelling the free movement of people would fundamentally call into question the bilateral path for Switzerland and Europe," Justice Minister Simonetta Sommaruga told a news conference in Bern.
The SVP launched its drive to get a referendum held on the issue after compromise-minded lawmakers in 2016 stopped short of requiring quotas on European immigration that voters had demanded two years earlier.
If the referendum motion is passed, it would require Switzerland to unilaterally cancel free movement if the country is unable to negotiate a waiver with the EU within 12 months.
In urging opposition to that, Sommaruga said immigration from the European Union to Switzerland has already slowed to levels not seen in more than a decade, which she called a sign the country is now competing with other European nations for workers.
Last year, net EU immigration to Switzerland was around 34,000, shy of record years like 2013 when 66,000 more people came from the EU than left. For 2018, net EU immigration through October was 26,809, Sommaruga said.
SVP President Albert Roesti called Sommaruga's focus on the slowdown disingenuous, given that in 2000 -- the year the free movement pact with Europe won Swiss voters' support -- the government had forecast far fewer Europeans would come annually.
"That's an immigration lie, because the Swiss cabinet at one time was talking about only 8,000 people," said Roesti, whose party is parliament's strongest at 29.4 percent representation.
"This year, too, tens of thousands are coming," he added. "When Europe's economy weakens, pressure will increase massively, and we won't have any instruments necessary to steer that."
A quarter of Switzerland's 8.4 million residents have foreign passports. Since 2002, when freedom of movement took effect, Roesti said, Switzerland has added 700,000 EU citizens. (Reporting by John Miller; Editing by Hugh Lawson)
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